Everything is complicated
There are no bans on the purchase of real estate in other countries for citizens of the Russian Federation at the beginning of October 2022 from anyone, neither from Russia nor from foreign countries. However, the process of buying an apartment abroad for Russians is no longer as simple as it used to be. The difficulties are connected both with the sanctions imposed on Moscow in the world and with the counter-sanctions adopted in response in the Russian Federation.
The main problem that arises for buyers from Russia is the transfer of money. Firstly, 20 Russian banks, including the largest ones, have been sanctioned and disconnected from the international transfer system. Probably, in the near future, this list will be replenished by Gazprobank and a number of other credit institutions. Some banks, for example, Tinkoff, are not deprived of this option, but they have established protective commission rates for currency transfers.
Secondly, transactions through those Russian banks that have not been sanctioned take longer due to the fact that correspondent banks in other countries check the payer more thoroughly and may request additional information, for example, about the purpose of the transfer. Payment deadlines have increased to 3-7 days, and in some cases up to 3 weeks. There are situations when the payment does not go through at all, and the funds are returned to the sender's account.
Thirdly, Russian banks may refuse to make a payment if you are trying to make a transfer to the account of an organization or a citizen from a so-called "unfriendly country". According to the decree of the Government of the Russian Federation dated July 24, 2022, the list of "unfriendly" includes 49 states that have imposed or supported sanctions against Russia.
The second group of problems that arise for buyers of real estate with Russian passports is related to the fact that banks in some countries, for example, in Italy and Spain, have stopped opening accounts for citizens of the Russian Federation, and have also introduced a ban on replenishing existing accounts. At the same time, a prerequisite for conducting an apartment purchase transaction in these countries is that the buyer has an account with a local bank.
In addition, in accordance with EU Council Resolution No. 328 of 02/25/2022, Russian citizens cannot keep more than 100,000 euros on their bank accounts in EU countries. There are precedents when, by agreement with the bank, the amount above the limit was transferred for a short period only for making a transaction, not for storage. But you should not abuse this, because otherwise the account may be frozen.
Quite difficult
Despite the fact that real estate agents in all countries talk about difficulties with calculations, the degree of problematic transfers, "the scale of the disaster", depends on the policy of each particular country and differs significantly.
Conditionally, the "orange zone" can include, for example, Spain, Italy, Bulgaria. In these southern countries, once beloved by Russian investors, it is not easy to make a deal, and the share of buyers from Russia has significantly decreased.
According to an expert on foreign real estate RentsaleYulia Titova, today there are Russians in the real estate market of Spain and Italy who have either the residence of these states or second passports, for example, of one of the CIS countries. Such people already have an account in the local bank. Recall that Spanish and Italian credit institutions have stopped opening accounts for Russians, and its presence is a prerequisite for making a transaction in these countries. The issue of replenishing the account with the required amount is resolved with the bank on an individual basis.
"Despite the fact that there is no direct ban, in reality it is not yet possible for Russian citizens to open an account in Italy," says the director of the Italian agency Italcasa Elena Dvurechenskaya. – Even if there is one, any transactions are difficult. Recently, a customer from the Russian Federation was hardly able to make a transfer through her account opened back in October 2021, as the bank's director called and asked to use it only in case of emergency, a very long bureaucratic procedure for each operation. Part of the funds was managed to be spent using the notary's deposit. But the amount at the same time was relatively small, in the range of 300,000 euros.
When buying an apartment in Bulgaria, customers from Russia face the fact that they cannot transfer money from accounts in Russian banks, as they are reluctant to conduct transactions in an "unfriendly" state. According to the sales director Bulgaria Avenue Evgenia Prokazova, attempts to pay by transfer from banks not disconnected from SWIFT in Russia are associated with additional negotiations, justifications, letters asking to coordinate the transaction.
As a result, customers are often forced to transfer money to the bank of another, "friendly" country, and then transfer them to the seller in Bulgaria or use the services of an intermediary. The scheme with an intermediary assumes that the money is transferred in cash in rubles to a certain representative in Moscow, and at this moment in real time your proxy in Bulgaria receives the corresponding amount in euros at the exchange rate on the day of the operation.
"There is a demand for apartments in Bulgaria among Russians, but due to difficulties with money transfer, as well as due to the lack of direct flights between our countries, their market share has significantly decreased," comments Evgenia Prokazova. Bulgaria has had a very productive year in terms of sales. Last year was active, and this year is even more active. However, there are not as many Russian buyers as before. More investors come from Ukraine, Israel, Germany.
It should be noted that Estonia, Lithuania, and Latvia conditionally belong to the red zone today. Since September 2022, it is impossible for Russians who do not have a residence permit to enter these states, even if they are owners of real estate on the territory of these countries. There is no question of buying real estate in the Baltic States.
Difficult, but possible
Countries with conditional green markings are primarily Turkey, the United Arab Emirates, Georgia, Thailand, Serbia, as well as Egypt, the Dominican Republic, Indonesia. The main attention of those who are considering buying real estate abroad today is focused on these areas.
Cyprus, Montenegro, Portugal stand apart. These countries have joined the sanctions, are included in the list of "unfriendly", however, it is possible to open an account here in some banks, and the room for maneuver, although narrower than, say, in Turkey, is wider than in Spain. According to the CEO DOM Real Estate Kirill Ravchenko, it is possible to open accounts for Russian citizens in Cyprus, although it has become more difficult – if it used to take a week, today it takes 2-3 weeks. In addition, you can only deposit 100,000 euros to this account, as elsewhere in the EU.
Payment methods when buying an apartment
SWIFT-transfer from non-sanctioned banks
The main, safest and preferred way to pay the seller of the apartment, if the buyer is a Russian, is still a transfer through banks that are not disconnected from SWIFT.
According to the marketing director Alanya Property Sales Anastasia Kezik, most Russian citizens, when buying an apartment in Turkey, pay from their specially opened foreign exchange account in Raiffeisenbank to the account of the developer or owner of the object. The basis for such a transaction is a purchase and sale agreement indicating the account number to which funds must be transferred. The expert notes that such a scheme is possible if the seller is ready to show the full value of the property in the contract.
In the United Arab Emirates, difficulties with bank transfer often arise when buying on the secondary market. There are many investors from all over the world in the country, and sometimes there is a situation that the seller of the apartment you like turns out to be a citizen of an "unfriendly" state, and, accordingly, it is impossible to transfer funds from a Russian bank.
As for the primary market, in this case everything is simpler, since the owners of development companies in the UAE are mainly citizens of the country, along with the state, although there are exceptions. According to the managing partner Royal Home Real Estate Elena Timchenko, developers approach the issue with understanding and provide the documents requested by the banks of the Russian Federation: licenses of developers and projects, reservation forms, invoices. At the same time, buyers must independently translate the documents required for submissionpapers into Russian. The expert notes that after the introduction of restrictions, Russians began to buy real estate much more often off-plan, for construction companies.
Managing Partner Exotic Property (Thailand) Svetlana Kasatkina says: "In order for a bank in Russia to approve a payment, you must provide: a purchase and sale agreement in English with a translation into Russian, a letter stating that the founders the construction companies are not citizens of "unfriendly" states, as well as the details for the transfer.
Director Kolos Residence Nikoloz Tsurtsumiya (Georgia) shares: "Today, clients from Russia send the necessary amount to the account of our construction company from their account in Raiffeisenbank. The payment is made in dollars at the exchange rate on the day of payment. In order for the transaction to become possible, the buyer must upload a scanned contract in the bank's personal account, which must be signed on both sides. As a rule, the transfer arrives within a few hours. Maximum – one day ». Raiffeisenbank's commission for a currency transfer is $200, regardless of the amount. For this reason, using this method to transfer monthly installment payments is quite expensive. The receiving bank in Georgia also charges a commission of about $45.
According to Kirill Ravchenko, when buying an apartment in Cyprus, it is realistic to pay by transferring funds from Russian non-sanctioned banks, such as Raiffeisenbank, Vneshtorgbank, Agricultural Bank. This usually takes up to 3 business days. But it may also be delayed due to the fact that Cypriot banks scrupulously carry out the KYC (customer identity verification) procedure in relation to clients from Russia. "In our practice, the fastest is when the payment came in 2 days, and the longest is in 3 months," the expert says. This method is suitable when purchasing real estate from a developer. A developer and a bank usually have a partnership based on long-term cooperation, and the bank is more willing to coordinate a payment from a client of a company known to him. If the seller is an individual, then the probability that the payment will be approved by the bank is lower.
Cryptocurrencies
In many countries, it is becoming popular to pay for real estate using cryptocurrencies. Similar methods are common in Thailand (about 30% of transactions in the primary market are carried out using crypts), the UAE, Turkey, Georgia. We talked about this method of calculations in detail in article about digital currencies. However, firstly, restrictions do not allow Russian citizens to store assets worth more than 10,000 euros on cryptocurrency exchanges. Secondly, the new sanctions may completely deprive Russians of the opportunity to use digital money trading platforms.
Cash
Is it possible to buy an apartment for cash? Or at least make some part of the amount, for example, the initial payment, if we are talking about installments? This method is acceptable in Georgia, Turkey. It is allowed to export $10,000 (or the equivalent in another currency) per person from Russia abroad. Thus, a family of 4 people can take up to $40,000 with them, which is equivalent to the cost of a small apartment in Batumi.
In the UAE, in Cyprus, this method of calculation is risky. "Transportation and payment of large sums in cash is not welcomed by the Central Bank of the UAE," explains Elena Timchenko. "This may entail an additional investigation into the origin of the funds, and therefore lead to a delay or even cancellation of the transaction."
Through an intermediary
The details of this method vary in different countries, but its essence lies in the fact that you transfer money in Russia in rubles to a person who has a power of attorney from the developer, or to an intermediary recommended by the agency.
So, in Moscow, St. Petersburg and some other large cities there are offices-exchangers, whose co-owners are citizens of Turkey. The client can bring money in Moscow and receive cash in Antalya during the day. In Russia, transactions are assigned a code, and in Turkey, the bearer of this code is given a specified amount, minus the commission, the amount of which ranges from 1% to 7%. The larger the amount, the lower the commission.
In some countries, for example, in Northern Cyprus, the buyer transfers money to a certain person in Moscow, and at the same time, minute by minute, these funds in currency at the exchange rate on the day of settlement are received by his lawyer, who acts as a guarantor.
To go or not to go to such a not the simplest configuration of the transaction depends on how much other payment methods are possible in your case and how much you trust those who recommend this scheme.
Via payment systems
Some part of the amount for the initial payment for the apartment can be withdrawn abroad using international payment systems: "Golden Crown", Contact or "Unistream". Each of them has its own limits on the amount of the transfer. For example, in the Golden Crown, the monthly limit of transfers that one user can make is about $10,000. You cannot send more than $5000 to Turkey per day, and more than $2000 to Georgia.
Funds can be collected in cash at one of the banks or MFOs, the list of which is listed on the payment system's website, or received on a foreign bank card, if available.
The commission is usually 1-2%. In Turkey, since the transfers of the "Golden Crown" go through the Central Bank, an additional 4% is debited when cashing out. If the funds are credited to a bank account, the commission is less than 1%, but you will receive the money in lira. And another nuance. If you want to withdraw the amount earlier than in a month, you will have to pay a 2% commission for cashing out the currency.
Through accounts in foreign banks
Many buyers open bank accounts in countries that are more loyal, for example, in Armenia, Georgia, Serbia, and transfer money from these accounts to the account of a real estate seller, for example, in Montenegro. At the same time, even in these jurisdictions, the requirements for Russians have become tougher. The KYC procedure is carried out for a long time and carefully, and sometimes failures occur.
It should be borne in mind that a personal presence is required to open an account abroad.
Buying from a Russian
One of the options is to find a real estate seller abroad, who is also a citizen of the Russian Federation, and make settlements with him in Russia in rubles. At the same time, all questions about the legal registration of the transaction are taken over by a local agency that you trust.
Purchase on company
If a Russian plans to open a business in one of the countries, then he can buy an apartment not for an individual, but for a legal entity. This will make it easier to make settlements with the seller of real estate.
Payment was successful
To summarize, Russians who have a residence permit from other countries or a second citizenship still have the opportunity to purchase real estate even in states from the orange zone. Everyone else should consider options in the available countries. There are limitations in the calculations, but they are not fatal. Despite some difficulties in the form of lengthening the terms of the transaction, the safest way is a bank transfer from an unsanctioned Russian bank directly to the developer's account. Alternative methods are also «working» – the main thing is to properly assess your capabilities, preferences and risks.
